By Chris Elliott, Senior Economist (Apr. 18/16) – It’s still early in the year, but Canada’s overall economy began 2016 on solid footing. Here are a few highlights:
- In January, the Canadian economy expanded for the fourth consecutive month with a 0.6% increase over December. This is the strongest monthly growth since July 2013.
- Consumer confidence improved for the second consecutive month in March.
- Month-over-month retail sales advanced by a stronger-than-expected 2.1% in January. That’s the largest monthly gain since March 2010.
- Net employment in Canada jumped by a stronger-than-expected 41,000 jobs in March after declining in January and February.
- The increase in employment lowered Canada’s unemployment rate by 0.2 % to 7.1%.
The Bank of Canada has upgraded its outlook, with real GDP forecast to grow by 1.7% in 2016. This is an upward revision from January’s call for a 1.4% expansion. The main reason for the upgrade is the federal budget, which will add $25 billion in spending on infrastructure and families over the next two years. Canada’s economy is forecast to grow by an additional 2.3% in 2017.
A stronger economy is good news for the restaurant industry, but foodservice operators remain cautious about the future. According to Restaurants Canada’s soon-to-be-released Q1 2016 Restaurant Outlook Survey, 56% said the weak economy was having a negative impact on their business, up dramatically from 37% in Q1 2015.
As a result, the share of operators who expect their sales to accelerate over the next six months came in at 32% in Q1 2016 compared to 46% in Q1 2015.
At the same time, 24% of operators in Q1 2016 expected sales to decelerate compared to 14% in Q1 2015.
The remaining 43% of operators expect their sales to grow at about the same pace.
Alberta remains the hardest hit from the economic downturn as commercial foodservice sales fell by 3.1% in January compared to a year earlier. This is the biggest decline since the start of the recent recession. Just 4% of operators in Alberta expect their sales to accelerate over the next six months, compared to 61% who expect sales to decelerate.